Faster into Homes

This First Home Student Loan Repayment Diversion Bill help young people to save faster for a deposit for their first home. Home ownership is becoming a distant dream for thousands of people from ‘Generation Rent’ with rapidly rising house prices, LVR deposit requirements and low wage growth. We want to help by giving people more choice.

This Bill will:

Create a scheme which allows student loan borrowers to defer paying back their student loan to help them save for a house.

Allow anyone who is earning over the repayment threshold of $19,000 to defer part or all of their mandatory 12 percent student loan repayment into a housing deposit savings account.

Establish a fund, held by the IRD, which would approve student loan diversion savings (combined with KiwiSaver and other savings) to be spent on buying or building a first home.

Give people the option of saving for a home deposit now and paying off their student loan once they have secure housing.

Ensure that any savings not allocated towards a first home are transferred back to student loan balances.

Why a student loan diversion?

Many New Zealanders struggle to save for a first home deposit, particularly when 12 percent of their income before tax goes on compulsory Student Loan repayments. Getting a deposit together has become even harder with LVR restrictions across the country.

The Government has made it harder for graduates to get into their first home by failing to act quickly to stop the housing crisis. National has also made a number of negative changes that have made it harder for the hundreds of thousands of New Zealanders with Student Loans to save, like increasing the repayment threshold from 10 to 12 percent, halving the Government’s annual KiwiSaver contribution, and removing the bonus incentive for lump sum student loan repayments.

Helping young people into homes will also encourage them to stay in New Zealand, improving student loan repayment levels in the long run. Currently borrowers can receive a Student Loan repayment holiday when travelling overseas for one year and it is an issue of fairness that those who stay, work and save in New Zealand can’t access a repayment break too.

We want to allow Kiwis the choice to prioritise paying off their loan faster or get into a home faster.